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True or False The value of any capital project can be assessed by estimating expected future cash...

Question:

True or False

The value of any capital project can be assessed by estimating expected future cash flows from the project and discounting them to the present value. This procedure accounts for the time value of money.

Time Value Of Money:

One of the core principles of finance, the value of money even when the amount gets increased every year as it earns interest diminishes with time due to laws of inflation. A $5 note is more valuable today than it will be 5 years from now. This is why 1$ today has greater value than 1$ tomorrow.

Answer and Explanation:

Referring to the above concept, the statements confers to the principle of the time value of money and hence is True.


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Discounted Cash Flow, Net Present Value & Time Value of Money

from Accounting 102: Intro to Managerial Accounting

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